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Nottingham goes bankrupt: more councils at risk

30 April 2024

Nottingham Council House. Photo tshrinivasan (CC BY 2.0 DEED).

Local government minister Simon Hoare announced in February that commissioners would be appointed to run Nottingham City Council. This follows the Labour-run council issuing a section 114 notice after the council overspent by £23 million – effectively declaring itself bankrupt.

The commissioners will have extensive direct powers – over the council’s finances and running front-line services. This is the second recent instance of a council being unbale to run. More are expected to follow, despite the increases in council tax announced in March.


People are suffering big rises in council tax along with cuts to or abolition of needed local services. No political party has set out a plan to find the money to fund these services. Each blames the other.

Last year Birmingham City Council, the largest local authority in England, declared itself bankrupt. Government sent in commissioners to the council after it issued the same bankruptcy notice in September.

Bradford, Cheshire East, Durham, Middlesborough, Somerset, and Stoke-on-Trent all face an immediate threat of bankruptcy. Others like Kirklees are making deep cuts to services, hoping to avoid this.

At risk

An estimated 127 councils out of a total of 317 in England are at risk within the next five years. In a few cases such as Thurrock, Spelthorne and Croydon councils seem to have suffered from very poor decisions and leadership. But for most the problems are linked to excessive debt – getting worse as interest rates rise.

In February, Liberal Democrat Somerset Council leader Bill Revans warned: “Based upon current forecasts there is a high likelihood that a Section 114 notice will need to be issued in respect of 2025/26.”


Somerset declared “a financial emergency” in November. Cuts in Somerset include more than 1,000 council staff redundancies, and a halt in funding for public toilets, CCTV and theatres in the county. Plans to close five recycling centres, as well as cuts to funding for bus services and libraries, will be reviewed in the coming year.

A similar scenario is playing out across the country. These bankruptcies are expected to continue: central government has not increased funding of local authorities in line with inflation, and spending power now is 4.7 per cent lower than in 2022.


But there is also a long-standing reduction in local government financing. Unison, the union representing many council workers, has raised the issue year after year, with little change from government – but continues to campaign for good quality local government serves as well as decent pay.

Jonathan Carr-West, spokesman for the think tank Local Government Information Unit said, “Over the last 13 years, we've seen the amount of money that central government gives to local government reduced by more than 40 per cent.”